Manufacturing Appear to be Bottoming Out

Commerce Department data for April manufacturing orders suggest that the downturn in manufacturing may be bottoming out. Perhaps more important than the April data is the trend that has seen increases in orders in two of the last three months, following a period of six months of continuous declines.

All industries did not benefit uniformly. Defense capital goods soared by 23.2% percent and demand for communications equipment rose by 6.9%, while machinery orders were up 2.7% and primary metals such as steel rose by 1%. Transportation remained volatile with motor vehicles up 2.7%, while commercial airplanes orders fell 6.8%.

While this good news may not signal the beginning of the recovery, it does offer hope that the worst may be over. This changed reality would suggest it is time to begin thinking about what investments should be considered to improve energy efficiency and productivity in manufacturing, particularly as energy prices have continued their upward trend, with oil prices currently above $60/bbl.